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The ”tax revolution”

In the sitting from Wednesday, November 8th, the Gov’t passed through a GEO on amending the Tax Code.

Main amendments that would impact business environment, starting January 1st 2018, (presented by the Minister of Finance, Ionuț Mișa in the press conference after the Gov’t sitting):

  • Decreasing the income tax from 16% to 10%. City halls see budgets shrink by announced fiscal changes. At present, local administrations receive a quota of 41,75% out of income taxes collected to the state budget. The Gov’t promised to increase the quota to 43%. Mayors around the country request increasing the quota up to 60% in order to support announced local investments.

  • Decreasing the social contributions by two points percent, from 39.25% to 37.25%, which will be split as follows:

  • 35% to be paid by employee

  • 2.25% to be paid by employer

  • Transferring the social contributions in the employee’s duty (35%). These will be broken down as follows:

  • 25% - social security contribution for pension (CAS) (instead of 26.3%),

  • 10% - social security for health (CASS) (instead of 10.7%).

  • Both contributions will be entirely paid by employee, out of the gross salary.

  • A work-related assurance contribution (which covers the risk of unemployment, accident, sick leave, salary claims) of 2.25% for employer. This is the only tax to be paid by the employer.

  • Chain deductibility of VAT.

  • Increasing the celling for the micro business statute from 500.000 to 1 million euros.

  • Tax on turnover of 1% for microbusinesses under 1 million instead of income tax of 16%.

  • Transposing of the Council Directive (EU) 2016/1164 of 12 July 2016 on preventing tax base erosion risks and transfer of profits. The Directive regulations remain unchanged and they will enter into force by 1st January 2019...

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